New Immigration Program for Entrepreneurs – The Start-Up Visa
It is a “start-up visa” aimed at potential immigrants who wish to start a business in Canada. We have not seen this type of visa in the past. Although we used to have the entrepreneur program, that was not aimed exactly at those who want to start a business from scratch with investor funding.
This start-up visa will require the immigrant to have support from investors – either an angel investor group or some other kind of venture capital group prior to applying.
In future, CIC will announce which investor groups in Canada will be eligible to participate and support immigrants in their entrepreneurial efforts.
So why this visa at this point in time?
The government intends to attract immigrants with extensive business skills and successes so that the can start a business in Canada and create employment for Canadians. The carrot in this program is of course a fast-track to permanent residency. The longer term prospect is to generate lasting economic growth through this immigration program.
I believe the government is on the right track in creating a visa specifically aimed at start-ups. However, I do have some concerns with this program.
My biggest concern relates the funding requirement. The potential immigrant will have to secure funding with one of several investment groups located here. In my view, this puts individuals at a disadvantage.
If an individual has a successful business career or connections in another country, it seems odd to deny that individual access to funding from his or her own country.
Investments are often made based on personal relationships and the majority of the applicants will not likely have connections with the investment groups in Canada.
My other concern is the basis on which an investment is made.
Angel investors only invest in start-ups with a large potential and a lucrative exit strategy. This severely limits the types of investments that will be made, and increases the risk of failure.
You may already know that most investments made by angel investors fail, and they count on that one (or two) big hits to make-up for the others (Facebook anyone?). It makes me wonder what sort of entrepreneur will be attracted to the program.
Why does this matter?
It matters because the vast majority of jobs in this country are created by small business – 20 employees or less. Angel investors aren’t interested in small business – they need it to scale so they can exit with a healthy financial return.
I would have preferred an avenue for a talented entrepreneur to start a small business that employs perhaps 10 Canadians, rather than a program that invites pitches for businesses that angel investors will be attracted to.
We’ll see what happens – CIC will no doubt adjust the program based on its success or failure.